Jul 22, 2007

Positioning: what are you going to sell, and to whom? If you have decided that service is "context" for your firm, are you going to package services for sale, give them away with your products, or a little of both? Perhaps there is an opportunity to tier your service - provide a particular level of service free with your product, and allow customers who demand it to pay for enhanced service.

That's a decision that Network Appliance Inc. has made. "We've determined that service is not "Core" for us. Since our products are simple and reliable, we bundle as much as we can into the product, at no incremental cost," says Collette Anderson, Services Field Marketing Manager for Network Appliance Inc. "Our goal is to make service a non-issue for our customers - to remove any reason for low satisfaction with our products."

Firms like Network Appliance Inc. (http://www.netapp.com) invest heavily in service cost reduction to reduce the customer's total cost of ownership. "Our Mean time Between Failure is extremely high but when customers do need service, many prefer to contact us through our service and support web site (http://now.netapp.com/public/sitemap/sitemap.shtml)," says Anderson. Web technology allows customization, and puts the customer in control of the service interaction, especially for self-service items like software upgrades or usage questions.

Remote support, and significant "back office" investment in database profiling and monitoring, is perceived as a powerful differentiator by many customers. "Occasionally we call the customer about a problem that they didn't even know about, but our system has diagnosed the trend, and we've already dispatched the part and an onsite installer," says Anderson.

This kind of "tailor made to the customer needs" positioning can also lead to a lot of custom service business. "If our customer asks for some special service or process, we bend over backward to accommodate him," Anderson explained. Sometimes fair pricing for custom services can be complicated and hard to calculate but a willingness to meet a customer's custom needs allows you to keep up with changing customer requirements. "When we find that a significant number of customers have asked for a new feature, we make it a standard service product."

5 Key Ideas

1. Combining services critical to customer satisfaction with your product, and service tiering, offering additional services or higher service levels for those willing to pay, will allow you to keep fixed costs down, but keep your more demanding customers happy.

2. In service "context" situations, don't apologize for the lack of a human touch. Customers appreciate cost minimization, and they like to "drive."

3. If they ask for it, and you can,-- give it to them. Generally, services are a lot easier to customize than manufactured products. Offer them on demand, for a small premium over cost. (You'll also get a built in Market Research benefit!).

4. Don't be afraid to "partner" if your customers need services that aren't in your budget.

5. Partners are also a great way to reduce the cost of providing on-site service.